» by Volker Hüls
The question of compliance with norms is at the heart of the international legal system. Arguably, only rules that are
followed have sustained standing in the global community. Codified international law, derived from its traditional sources
as defined by the Statute of the International Court of Justice, encourages such commitment through legally binding
treaties between parties and judicial organs to punish deviation. However, not only do these treaties leave gaps where
compromise could not be found, but they also must often reflect the lowest common denominator between the signatories.
"International Treaties leave gaps where compromise could not be found, but they also must often reflect the lowest common denominator between the signatories. Soft Law has increasingly become a remedy for both shortcomings of treaty law"
Soft Law has increasingly become a remedy for both shortcomings of treaty law. Although often said to be a term
redundant in itself, the phrase appropriately describes the numerous non-binding norms that today regulate international
processes where no treaty exists. The very softness of these instruments has certain advantages. Parties to such
agreements apparently accept more commitment than in a legally binding treaty – simply because they can easily
be abolished or renegotiated without any negative consequences. The definition process is consequently faster and
less controversial than treaty negotiations.
These rules however, are not law as such, and must be hardened to make them effective. In practice this takes place
through various compliance mechanisms and by incorporation into municipal law. Soft Law can therefore be seen as a
transitional process rather than a permanent structure, which at its outcome will have created codified law.
International Financial Law in particular has very successfully embraced Soft Law as a way to address urgent issues
swiftly and flexibly without the need to immediately conclude treaties. Factors promoting compliance such as peer-
"A paradigm of soft law with high compliance is the output of the Financial Action Task Force (FATF), an interest group created by the G7 to combat illegal use of the international financial system. Through several mechanisms these non-binding norms are substantially hardened"
pressure, market incentives, and oversight bodies are firmly in place in this environment, supporting the use of
non-binding instruments. A paradigm of soft law with high compliance is the output of the Financial Action Task Force
an interest group created by the G7 to combat illegal use of the international financial system. Through
several mechanisms these non-binding norms are substantially hardened, making them applicable not only to members
but also to entities and territories depending on these members.
The FATF process displays the advantages and disadvantages of soft law particularly in its effect on the informal
funds transfer systems in Somalia. The country makes a perfect example for the impact of soft law - it has been
without a government since 1991 and can therefore neither enter a treaty obligation nor can be subjected to
international mechanisms to enforce existing obligations. In this case hard law instruments, through their
traditional means, fail to have the intended impact. As a trade and service based economy, however, Somalia
engages with other jurisdictions and is consequently exposed to their norms.
The absence of a conventional banking sector in particular has strengthened informal funds transfer companies in
Somalia , which rely on interactions with the global financial system to operate. Previously unaffected by FATF
rules these businesses, due to their informality, have attracted attention in the recent intensified focus on fighting
terrorism and terrorist financing. New FATF guidelines now deal with terrorist financing and informal banking.
Somali companies, with no government to advocate their cause, find it hard to comply with these new regulations.
The hard impact of FATF soft norms on the Somali remittance systems is therefore an especially suitable model to
demonstrate the advantages and the disadvantages of soft international law.
© Volker Hüls 2004.
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